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« American Justice | Main | Free speech, Egyptian style »

Feb 25, 2007

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The CA

Maybe Billy could earn more money if he wasn't wasting his time gathering signatures for a petition to raise the minimum wage. I believe that such efforts pay $0.00 per hour. Further, it is meaningless because it isn't going to happen.

Life is about choices. Billy admits to choosing his own financial circumstances when he decided to become a full time blogger. Why should anyone else be required to subsidize that?

The guy who starts his own business and pays an employee minimum wage is also taking a risk and making a choice. If he doesn't start the business, the employee has no job and also earns $0.00 per hour. If the job doesn't pay enough, you could simply choose not to take it. If nobody takes it because it doesn't pay enough, the employer will have to raise the wage. If he can't afford to, then perhaps he should have chosen something else to do.

Roch101

" If you saw that wage gap and had a business that depended on cheap labor, wouldn't you give some serious thought to moving it out to Summerfield?"

This is one of those observations that seems completely logical on its face, but only if we make some assumptions, namely if we assume that those jobs would be just as valuable to the employer in Summerfield as in Greensboro. Would they?

Certain jobs, such as office support, manufacturing, data entry, computer programming engnineering jobs and all other "professional" occupations, for example, could probably be easily located in Summerfield just as easily as Greensboro with little to no negative consequences to the employer. However, these types of jobs already pay more than the proposed minimum wage, so there would be no motivation for an employeer to choose Summerfield over Greensboro.

However, most of the jobs that would be affected by the proposed minimum wage simply cannot be moved to Summerfield. They must be local. Just as the demand for fast food in Greensboro will assure that those jobs are not rellocated, so too for other types of jobs that pay less than $9.36/hr. Those would include construction helpers, security guards, preschool teachers, home health aides, pharmacy technicians, veterinary assistants, cooks, dishwashers, waiters, hotel cleark and maids, groundskeepers, janitors, cashiers, hairdressers, bus drivers and garbage collectors. These jobs are local by necessity -- they aren't moving to Summerfield to save costs.

So, the jobs that don't necessarily require a local presence and could be moved, by and large won't be effected by a wage increase and, therefore, won't move. The jobs that will be effected by a wage increase aren't portable to another community and, therefore, they won't move either. I think it's safe to say that the "but they'll just move down the road" argument is bogus when faced with the facts.

meblogin

Roch and I agree.

I fully support Guilford County raising minimum wage to $9.00 or greater per hour.

The benefit is that it might gain us some much needed talent from outside the county.

Fred Gregory

Try $3.50 an hour dude and get whacked in the process. Like C.A. sez it's all about choices:

The Worst Job In America

Jim Caserta

Great point Roch. It's sad that an econ professor presents such a weak argument, and it is really just his transparent belief "basically against minimum-wage laws".

Jim Caserta

Great link Fred. Dealing drugs more dangerous than being on death row!

Ed Cone

"Maybe 'weak and shit' is an important hypothesis."

David Boyd

If you've got a fast food restaurant and you have to pay dramatically more for labor (30 to 80% over the Federal level depending on what Bush does), you're going to have to raise prices. When you raise prices, you're going to drive customers elsewhere. Otherwise, the value meal would have been phased out long ago.

Roch101

Andy is a friend of mine and I find him to be very bright, thoughtful and open-minded. I wouldn't dismiss his opinions as ideology.

David Wharton

I'm not beyond being persuaded on this point, but I have a concern that those employers who couldn't move to Summerfield would react in the only ways available to them, that is, by raising prices or reducing labor costs by laying off employees.

Big employers like Wal-Mart or Target might be able to absorb the increased labor costs, but new businesses might also be less likely to invest in the city; thus you could be driving much needed new businesses to the exurbs.

You'll also be closing off some opportunities for entry-level workers for whom low-paying, first-time, of part-time jobs are an important stepping stone to better jobs. And maybe that teenager's part-time, low-wage job as a buggy wrangler at Food Lion is an important contribution to his family's overall income. If he gets cut because of high labor costs, his family is hurt, too.

Roch101

Here's a report that looks at what happened in Flordia after it raised its minimum wage.

Bubba

"If he can't afford to, then perhaps he should have chosen something else to do."

Which is exactly what many potential small business owners/potential employers will do if faced with a 9+/hr minimum wage in Greensboro. They'll just find a line of work that doesn't require labor.

But what the heck, who cares about small business owners anyway, right? They're a dime-a-dozen as it stands now.

Roch101

I also have to take issue with Andy's suggestion that a better alternative to raising the minimum wage would be an increase in the earned income tax credit. While Andy calls it a subsidy for the "incomes of the working poor," it could just as correctly be called a subsidy for the payroll of low-paying employers.

Andy correctly notes that such a subsidy would "spread the cost of the subsidy across all taxpayers rather than focusing it on the employers of low-wage workers (and their customers)." That's a good thing? Shouldn't employers and their customers pay for the labor they consume? Is anybody really in favor of taxpayers subsidizing low-paying employers?

Roch101

David W, you make some valid observations. When the petition to increase the minimum wage was being discussed, there was some consideration of exempting seasonal jobs and employees under a certain age. No such language made it into the final petition.

David Boyd

How about subsidizing low price shopping customers, Roch?

Roch101

How so, DB?

David Boyd

You said:

"Shouldn't employers and their customers pay for the labor they consume? Is anybody really in favor of taxpayers subsidizing low-paying employers?"

It's not the employers. It's us. It's people who shop and look for a deal that drives employers to seek to cut costs as much as possible and become as efficient as they can. If I'm the CEO of Walmart and people are willing to pay me margins that allow me to pay my employees $50,000/year and satisy from shareholders, I'm all for it. Makes my life less complicated. But if people are going to cross the street to save $0.10 on toothpaste, things just got a lot tougher.

Hence, the EITC is more a subsidy for value-oriented shoppers than for low-paying employers.

Roch101

Define it that way if you want, DB, are you then in favor of expanding the EITC because it subsidizes "value-oriented shoppers?"

Jim Caserta

Roch - great link to the FL report. That has been one of my points. Many places that have strong labor laws also have strong economies. You can construct simplistic arguments about how jobs will be lost, but there are empirical counterexamples that should carry more weight.

David Boyd

I'm more in favor of an EITC than a minimum wage increase. I think it mucks up things less. If you want someone to have money, give it to them.

Jim Caserta

From Roch's link:
Conclusion I: No empirical evidence shows that Florida’s minimum wage has caused businesses to lay off workers. Instead, state employment has shown strong growth since the new wage took effect, better than in previous years and better than the U.S. as a whole.

Conclusion II: Far from hurting, service sector industries are growing rapidly, and some industry experts expect this growth to continue during the coming years. There is no evidence that the minimum wage has hurt these industries in the manner predicted by critics.

Conclusion III: Far from seeing a mass exodus of businesses from the state, the number of private employing establishments in Florida has grown substantially since the enactment of the state minimum wage.

Conclusion IV: The new minimum wage raised wages for the very bottom of the Florida wage scale, but there is no evidence that it counteracted the state’s tendency to disproportionately create new jobs that are still quite low paying. Thus, its improvement in the wages of the very lowest paid workers does not show up in the general statistics on wage growth, and the rapid growth of low-wage industries likely overwhelmed its wage-increasing effect in aggregate wages in service industries. Global, or aggregate, data show wage increases, but they are modest.

Conclusion V: There is no evidence that its state minimum wage has put Florida at a competitive disadvantage. Instead, Florida has led the country in economic and employment growth. At the same time it continues to lag the rest of the country in average wages.

David Boyd

Florida also has a strong economy and no state income tax. Pretty good empirical evidence to get rid ours, no?

Also, at $6.40 Florida's current minimum wage is 24% greater than the current federal minimum wage. GSO's proposed minimum wage would be 82% greater. You don't have to be an economist to realize something has to give.

jc

I think comparing the min. wage of the city of Greensboro to the Whole state of Florida is apples to oranges.

Businesses in Fl. have no where else to relocate, unless they move to another state. In Greensboro, they could move a few miles to another county. If the state of NC was trying to do this, it might be a useful analogy.


The CA

The level of ignorance on display here regarding basic economic principles of supply and demand is stunning. No wonder America has such an education problem.

Bubba

"The level of ignorance on display here regarding basic economic principles of supply and demand is stunning."

What?

You mean a simple wave of the Progressive Magic Wand won't make everything fine here?

Jim Caserta

The FL example is a counter to the basic premise that raising the minimum wage necessarily causes any of the negatives mentioned. If it was such basic economic principle that those negatives would occur, why does the evidence show something different?

How minimum wage increases affect workers and consumers is complicated and should not be reduced to knee-jerk reactions like, "I'm basically against minimum wage laws" or Greensboro should have the highest minimum wage of all cities in NC.

We had a national minimum wage law that did not change for many years. If the idea of a minimum wage is agreed on, I think it a simple extension to index it something - as FL did. I also prefer the time-tiered increase that the federal increase is using.

Jim Caserta

Is labor an elastic or inelastic quantity? Are minimum wage jobs elastic or inelastic? Does the elasticity of a good or service affect its supply/demand curves?

Ed Cone

Dr. Brod's opposition to min-wage laws may be generalized, but it would not seem to be "knee-jerk," e.g., reflexive and unthinking, given his stature as a professional economist.

Roch101

"In Greensboro, they could move a few miles to another county." -- JC

JC, as I noted above, the jobs that could be moved are the least likely to be effected by an increase in the minimum wage. The jobs that would be most effected by an increase are those that demand a local presence and could not be moved to another county. Maybe I've missed something. Could you please explain what jobs you would expect to move to another county?

Jim Caserta

I hadn't read Dr. Brod's response carefully enough, and threw in the tidbit about elasticity before I saw it in his response. A study of the impact should be done, and a more rational approach than "minimum wage stays constant when Republicans are in control and bolts up when Democrats are in control" should be adopted.

David Boyd

A 'more rational approach' leads us farther down the road to a command economy. As good as being in control seems, it just doesn't work.

jc

from Roch-Could you please explain what jobs you would expect to move to another county?

Roch, I think any company that utilizes min wage EE's, such as manufacturing , construction, service, maintenance, etc where you are providing a product or service and where the customer does not have come to you but you to them, they will go outside the city to make a profit. There will be exceptions of course.

A couple of examples: If I own a small manufacturing plant, <50EE's and 90% of my workers are doing menial assembly work, say putting a fitting on a hose. There is no way in hell I'm staying in greensboro. I cant afford to pay another 50% more in wages because my biggest customer has just demanded that I cut my cost another 10% because he can buy from China if I dont. I am moving to reidsvile, high point, jamestown, level cross, anywhere but here. I cannot afford to stay in Greensboro.

What if you owned a call center here in Greensboro and you had over 500 or even 1000 EE's and you were paying most above min. wage, such as $7.50- $8.00 per hour and now you had to pay over $9.00 per hour? Would you absorb it and try to pass along to your customer or would you move 10 miles and save yourself the extra $$$? If you were looking at locating that call center in this area, would you choose Greensboro or would you locate it in Burlington?

To me, and I'm a business man, its a no brainer.

If this would was done state wide, it might not affect the city at all, but when you have choices so close by, I would see this as a huge negative.

Roch, I think any company that utilizes min wage EE's, such as manufacturing , construction, service, maintenance, etc where you are providing a product or service and where the customer does not have come to you but you to them, they will go outside the city to make a profit. There will be exceptions of course.


Roch101

"Roch, I think any company that utilizes min wage EE's, such as manufacturing , construction, service, maintenance, etc where you are providing a product or service and where the customer does not have come to you but you to them, they will go outside the city to make a profit.

You are building your opinion on a faulty premise. As noted in the link above to data from the Employment Security Commission, jobs in the industries you cite already pay above the proposed higher minimum wage. Whether to locate in Greensboro, where the minimum wage might be $9.36 or Burlington, where the minimum is $6.15 is not a consideration when the business is already paying better than $9.36.

Your assumption seems logical, but when one looks at the facts, it is unfounded.

Percy Walker

I don't think jc is operating from a faulty premise at all. The very examples you cite, Roch, fit into some of jc's more general categories. The construction helpers, security guards, home health aides, groundskeepers and janitors that are utilized around town may work for companies that provide those services throughout Guilford and adjoining counties. Those companies would not be based in Greensboro. Will they be required to pay their employees $9.36 when working a GSO job only? if so, how would this be implemented? One will also find that some of the businesses and residences that use those services will find GSO too inhospitable.

Also, the businesses that require costumers to go to them that you cite -- e.g., preschools, pharmacies, restaurants, hotels, hairdressers -- will surely lose business to similar enterprises outside city limits, particularly if they are unfortunate enough to have located near the city's borders.

Also, what kind of effect will this minimum wage have on the poor who are unable to work and that live on a fixed income -- e.g., SS retirement, SS disability, pensions? The federal or state governments or pension plans aren't going to give them a "cost of living in GSO" increase.

Jim Caserta

Instead of bouncing hypotheticals, you might want to look at real examples where there is a clear boundary between two minimum wage laws, like Jacksonville, FL and SE Georgia. Other border states would provide more data.

I don't really see who loses if Citigroup locates its call center in McLeansville instead of Greensboro. The employees of Citi making MW don't get a pay increase, but those within the city would.

Do you really think that people choose their hotel for the ACC tournament based on a marginal difference in room rate? I'm guessing, proximity to the Coliseum is the biggest factor. I would also guess that people choose their pharmacy based on proximity to home/work - making their choice somewhat independent of price.

The small factory owner has probably already moved his work to China or Mexico/Central America.

Roch provided a study using real data, while you're giving hypotheticals. Real data describing the effects you describe would be worthwhile to the discussion.

jc

Roch, I looked at your data and entry level maintenance workers were making much less than $9.36 per hour. So were landscapers. so were construction laborers. I'm sure there others. So, I dont agree that it wont have an impact on certain industries.

I will agree with "Whether to locate in Greensboro, where the minimum wage might be $9.36 or Burlington, where the minimum is $6.15 is not a consideration when the business is already paying better than $9.36.

That is what I call a level playing field.

"Roch provided a study using real data, while you're giving hypotheticals." - The data he gave were estimates only. There are still many small manufacturing companies still around. The hose assembly company is one of them, still fighting to survive.

David Boyd

Here's a start, Jim.

Percy Walker

In the interest of subverting my own negative views on the proposed increased minimum wage, I have reviewed this paper that studies the effect of the S.F. minimum wage on restaurants. Proponents of the increase will like it. I reserve my rights to respond.

Jim Caserta

DB - have you read that paper? I'm too cheap to spring the $5. It's also a survey paper, any links to the original research?

Billy The Blogging Poet

CA said, "Life is about choices. Billy admits to choosing his own financial circumstances when he decided to become a full time blogger. Why should anyone else be required to subsidize that?"

#1. I have never asked anyone to subsidize anything I've done, I made that clear on my blog post. None of Winey Sammy's money or anyone else's money has ever been used to support me.

And #2. Who would like to bet that the CA got Federal money to pay for his law school degree. I wonder how much in Federal Student loans Sammy still owes the government?

Sammy is a coward who would rather hurl insults that face facts: The fact is he would be homeless and on the streets if not for the efforts of low wage workers who support his insulting and arrogant choices.

Billy The Blogging Poet

Meblogin said, "I fully support Guilford County raising minimum wage to $9.00 or greater per hour."

I happen to know for a fact that Meblogin owns and operates a successful business right here in Greensboro and I salute Meblogin for his support and good business sense.

David Boyd

It's not $5. The PDF is at that link for free. All 155 pages. Talk about price elasticity, Jim!

I haven't read all of it, but it speaks directly to the new research coming out that is in contrast to previous research on the minimum wage. A good starting point, I think.

Billy The Blogging Poet

PS. Feel free to come join us.

Jim Caserta

DB - I seem to be denied access to the free copy. 155 pages doesn't seem to be optimizing my comparative advantage in labor - it's been a while since I've read a complete 100+ page journal article. I'll bet the conclusions summarize your point - eitc's are better targeted, but I'll bet it also says that there is a small negative, less than 5%, to no effect on employment, for a fairly substantial increase in minimum wage - $5.15 to $6.15.

I cringe at refering to social "sciences". Their statistics are ripe for manipulation and they perform no real experiments, let alone have any real control groups. I would expect any paper to be somewhat biased by the author's philosophical stance.

I'm surprised no one has rigged a sim-city type computer game to run using existing laws with some basic human behavior ai built in to see what the impacts of different laws/policy programs would be.

Jim Caserta

Here's 1 1/2 hr video "summary" of the 150+ page paper DB linked to - for those that prefer listening to reading.

The CA

Billy, my comments weren't meant as an insult, rather they were to demonstrate that wages are about choices, risk and reward. You are knowingly taking a risk, you admit it. You are aware of the consequences, but you do it anyway. I am not insulting you, rather pointing out that your own actions sort of work against you when making the minimum wage argument. My question about subsidies was a rhetorical one. I am not attacking the risk you are taking, but instead complimenting the risk, but disapproving of the argument. If you can do it, others can.

Second, I do have substantial law school debt. That was a risk I took, because I also have the obligation to pay it all back regardless of my financial circumstances. They aren't subsidized, rather they are guaranteed in the case of default, just like FDIC. It is a loan, not a handout.

Further, I was a "low wage" worker for many years. I made minimum wage in high school, and never made more than $10 per hour until I graduated from law school, and even that was only during summer internships. I also am self employed, and take a substantial risk every day. I don't have an employer paying me. If I don't have clients, I go out of business. I have been doing this for 8 years and have been able to succeed gradually over time to the point where I have my own employee(who makes substantially more than the minimum wage). If I go out of business, there are two people looking for job.

There was nothing arrogant or insulting about my comments. I would say the same thing if I wasn't doing this, and have said the same thing when I was a "low wage" worker. Nobody likes making minimum wage, and it isn't supposed to last for life unless you make it that way. If I wasn't doing what I am doing, I would be doing something else, but I'll be damned if I would settle for minimum wage. I would make a choice to rest on my college degree, or if I didn't have that, try to get one or improve my skills in another area to earn more money. There are plenty of work opportunities and options between being a lawyer and being homeless. Most of the bloggers here are proof of that. Quite a few I'm sure earn much more than me.

Roch101

"Roch, I looked at your data and entry level maintenance workers were making much less than $9.36 per hour. So were landscapers. so were construction laborers. -- JC

Precisely, JC. These are jobs that must be local. One cannot relocate a landscaping, construction or maintenance job to Burlington and still serve Greensboro customers. There is a demand for those jobs here that will continue to exist even if there should be an increase in the minimum wage.

Roch101

The construction helpers, security guards, home health aides, groundskeepers and janitors that are utilized around town may work for companies that provide those services throughout Guilford and adjoining counties. Those companies would not be based in Greensboro. Will they be required to pay their employees $9.36 when working a GSO job only? -- Percy

Yes, Percy, according to the proposed ordinance.

Ed Cone

"Maybe Billy could earn more money if he wasn't wasting his time gathering signatures for a petition to raise the minimum wage. I believe that such efforts pay $0.00 per hour. Further, it is meaningless because it isn't going to happen."

Hmm, don't know how Billy could have taken that as an insult....

The CA

I could see how it could be taken that way, but that wasn't the intent. The point was that Billy could better serve his cause by setting an example as a risk taker and entrepreneur and his time better spent making his own enterprise more profitable. His petition isn't going to help him or anyone else make more money, but his decision to take a risk might.

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